IVCC has dropped a 40-month long lawsuit over the real estate assessment of Marquis Energy LLC in Hennepin, costing taxpayers nearly $900,000 between the legal fees of IVCC and Putnam County.

IVCC’s decision came after an April 9 board meeting where board chair Melissa Olivero issued a press release on behalf of the college, “At a time when the college needs all of its revenue streams to support high-quality instruction and vital support services, it is now clear that this case could drag on for years and further drain our Education Fund. Thus, the Board of Trustees has decided to drop its case against Marquis Energy, LLC and Putnam County and focus on what we do best – teaching and learning.”

The nearly $700,000 IVCC spent on legal fees came out of the district’s education fund. IVCC had originally filed the lawsuit hoping that a new assessment of the plant would add to IVCC’s finances; however, over the course of the next three years, the suit ended up proving costly for the college.

IVCC entered the Bureau/Putnam Area Enterprise Zone in June 2006. The enterprise zone, which offers tax abatements for businesses doing improvements or making renovations, was scheduled to be in effect until July 1, 2017. The enterprise zone offers incentives for businesses in the zone as long as improvements began after July 1, 2007.

IVCC claimed that Marquis began construction before July 1, 2007 and therefore did not qualify for the abatement of real estate tax. In June 2010 IVCC approached Marquis Energy and Putnam County stating both that the abating of taxes on the plant and the assessed value of the plant were inaccurate.

IVCC’s claim was based on the numbers of appraiser Mark Pomykacz who was hired by IVCC to appraise Marquis Energy in April 2008 and again in January 2011. Pomykacz found the property to have a market value of $140 million in 2008; a value that is three times the assessment of $42.5 million offered by the Property Tax Appeal Board (PTAB) in 2009.

IVCC and the other parties failed to compromise on a value of the plant. President of Marquis Energy, Mark Marquis, made it clear that no compromise would be reached, stating, “They had no case.”

The failure to reach a settlement was reiterated by IVCC president Jerry Corcoran in a press release April 8, 2011: “With $1.4 million at stake we cannot look the other way… we have no other option but litigation, no recourse but to bring this before a judge.”

The suit was officially filed Oct. 17, 2011 by IVCC’s legal representative Walt Zukowski, the college’s attorney for over 25 years, against Marquis Energy and Putnam County.

If IVCC were victorious, it would bring an extra $1.4 million in taxes over the span of 10 years based on the assessment of Pomykacz. However the credibility of Pomykacz’s assessment came under fire on Oct. 30, 2013, when the state’s Department of Financial and Professional Regulation reviewed Pomykacz’s appraisal of Marquis Energy and filed a complaint against him.

The complaint stated, “The Respondent made a series of errors or omissions contributing to the communication of a misleading appraisal report.” Some of the errors, according to the department, include Pomykacz not inspecting the subject property in person and including non-taxable personal property, intangibles, and inventory into his assessment value.

“In Illinois, tangible personal property, intangible property, and inventory are not taxable,” according to the department. In Illinois, 101 out of 102 counties–including Putnam County– do not include personal property in assessments of real estate.
At the time the complaint was filed against Pomykacz, IVCC had paid Zukowski just under $400,000, according to data secured on Dec. 31, 2013 through a Freedom of Information act requested by Marquis Attorneys.

Pomkacz’s complaint was heard and voted on by the Department of Professional Regulation on March 20, 2015 where the board agreed with the judge’s recommendation for a reprimand and $10,000 fine. This decision is currently waiting to be signed by the new department head barring an appeal by Pomykacz.

In an attempt to end disputes, Marquis Energy formally offered IVCC $35,000 to pay for legal fees to obtain a second opinion regarding the merits of its litigation. Marquis Energy also offered a donation of $25,000 to the CTC building and another $10,000 in the form of two scholarships as encouragement for a second opinion. This offer was sent to IVCC in a letter dated April 1, 2014.

IVCC declined this offer on April 29, 2014, in a letter signed by Corcoran: “I recently discussed your April 1, 2014 offer to have another attorney provide a second opinion regarding the merits of pursuing litigation in this matter and the board’s position is the same as it has been throughout, that Walter J. Zukowski is the IVCC board attorney whom representatives of Marquis Energy LLC and Putnam County need to work with for resolution.”

Marquis also wrote letters and took out ads in the local papers when the dispute seemed to be heading for court in efforts, he said, “to expose the mismanagement and waste of taxpayer funds at the college.” Marquis even presented a Power Point to IVCC board members Jane Goetz, Matt Driscoll, and several community members about the inconsistency of the enterprise zone’s regulations and assessment values between IVCC and Marquis Energy.

“After trying for more than six months to resolve the dispute amicably, the college was left with no choice but to go to court to correct the situation. There was a mistake and the college tried to get it corrected,” said Olivero in the press release on April 9.

With no compromise being made, oral arguments began on May 14, 2014 in the Appellate Court and on July 9 the court ruled IVCC followed proper procedure for filing its complaint and that the Circuit Court could continue to hear the matter.

A part of these arguments includes the deposition of IVCC’s Vice President for Business Services and Finance Cheryl Roelfsema on Oct. 27, 2014. This document was provided to the IV Leader this month by Marquis who has continuing concerns about IVCC’s handling of this case calling it, “inaccurate and irresponsible.”

The deposition took place in the Circuit Court of the 10th Judicial Circuit Putnam County where many attorneys, including Roger Bolin of Boyle & Bolin Attorneys at Law, examined Roelfsema.

Bolin asked Roelfsema how many dollars in taxes IVCC was losing because of the abatement for which she responded, “I would estimate about $75,000 a year… The EAV was higher in 2009, so we were expecting to receive $141,000 in taxes.” The Equalized Assessed Value (EAV) of Marquis Energy was $42 million in 2009 and $26 million in 2010 based off the assessments of Putnam County Supervisor of Assessments Tamara Mehalic. The amounts Roelfsema estimates IVCC will receive in abated taxes are based off of these assessments in 2009 and 2010.

Marquis Energy has since petitioned the value of Putnam County’s assessment in 2009 through PTAB. The assessed value of Marquis Energy has since declined each year according to the legal representatives of Marquis. The current assessed value of Marquis Energy is $18 million, according to Mehalic.

In the deposition, the $75,000 is used as an estimate for the amount IVCC would receive each year in the enterprise zone until its end in 2017 if the abatement was reversed. This value is hypothetical since the assessed value for Marquis Energy has decreased from $26 million after 2010 and because IVCC left the Enterprise Zone in 2011.

Roelfsema also explained how the taxes would be distributed if the abatement was reversed: “Some of that will go back to the other counties for the bonds. Probably the rest of it because we were at the maximum on one of the other tax rates, so some of that money will go back to other counties, other taxpayers. But approximately 50 percent or more would go in for our education, our operating funds.”

Roelfsema later confirmed in her deposition that IVCC would receive roughly half of the tax money from Marquis Energy if the abatement was reversed. IVCC is obligated to do this by state law under the details of the Bureau/Putnam Enterprise Zone.

In the deposition, Roelfsema stated that she chose to use the EAV of $42 million in her report to IVCC’s Board of Trustees. “I assumed that the assessor had some valid information to put a value on the plant of $42 million in 2009,” said Roelfsema.

When asked why she included this value in her report to the board she said, “So that they could see, if we were to collect these taxes, how much revenue it would mean to us.” However when asked if she included the fact that roughly half of those taxes would go back to other taxing bodies in her analysis, she stated, “I did not show that,” and continued to say, “I can’t say why,” when asked why she left this information out.

Bolin then asked, “Would it be fair to conclude, that if a member of the board of trustees was reviewing your analysis, they would see whatever number you came up with and maybe assume that that was the net number to the college?” a question to which Roelfsema responded, “I prefer not to answer.”

At the time of Roelfsema’s deposition, IVCC had spent a little over $530,000 in legal fees to Zukowski according to data secured on July 24, 2014 through a Freedom of Information act requested by Marquis attorneys.

The argument, in the deposition, of Marquis Energy and Bolin was to show that IVCC has spent more money on legal fees than they could receive from abated taxes. Using the estimated $75,000 a year, the potential amount of money IVCC could receive is about $750,000 throughout the course of the Enterprise Zone. Therefore, after IVCC gave around half the taxes back, they would only receive $375,000, or in other words, less than their legal expenses, they concluded.

The value IVCC would receive if the abatement was reversed is relative to the value of the assessments used each year. Pomykacz’s appraisal would have granted more tax money to IVCC than Putnam County’s or Marquis’ appraisals.

The case continued on until IVCC dropped the lawsuit on March 19, 2015. IVCC’s Board of Trustees voted to confirm dismissal of the suit on April 9, 2015, in a closed session that also produced a press release from the IVCC board.

On the close of the suit IVCC’s legal fees totaled up to around $680,000 while Putnam County’s ended around $200,000. Marquis Energy refused to disclose their expenses on the case.

Corcoran was asked several questions regarding this case including if the board fully understood the amount of money that could be gained from this suit, if the reprimand of Pomykacz’s assessment influenced the college’s decision to drop the suit, and if the money used in this case was used in the best interest in improving education.

Corcoran said he and the board decided to stick with the April 9 press release: “We take pride in being a principled institution but at the same time, from a practical standpoint, we can no longer justify this continued expense.”